Thursday, November 21, 2019

Impact of Financial Losses for GM Auto Manufacturers Essay

Impact of Financial Losses for GM Auto Manufacturers - Essay Example By mid-century, the automobile was a necessity in every U. S. household, and GM led the way with Ford and Chrysler close behind. The Big Three controlled the industry from Detroit, Michigan. According to Wikipedia, the period from 1960-1985 was perhaps the "greatest in GM's history, as it eventually held slightly over 50% of the U.S. Market" (General Motors, 2006, 2.3). At the time, it was all about status, having the most popular brand. Unfortunately, in the mid 1990s, a downward spiral began, which has yet to be resolved for American car makers. It could have been predicted in 1984 when a joint venture between GM and Toyota gave Toyota an opportunity to establish a base in the United States and avoid newly established tariff on foreign pick-up trucks. Toyota's growth has accelerated ever since, with a $4.1 billion dollar gain in 2005 compared with GM's $10.6 billion dollar loss ( Solman, 2006). In a recent PBS interview, GM CEO Rich Wagoner noted that restructuring is taking place in the company in an effort to "compete in the global auto industry and global economy" (Solman, 2006, par. 12). He claims that the company is launching new products, and accelerating the application of biofuels E85. Wagoner also mentions a "breakthrough" health care deal with United Auto Workers (UAW) and the major restructuring of GMAC. With attrition and plant closings, he is optimistic that the company will be more streamlined and better able to compete globally. What sounds like positive action, however, definitely has its down side, with employees about to be faced with increased co-pay for health care and pharmacy and heavy job losses as plants close down. The company's "failure to foresee drop in demand for gas-guzzling SUVs, slow entry into hybrid market and Toyota's reputation for high quality" puts them behind in the race for market share (Kellar, 2006, par. 2). Micheline Maynard, Detroit bureau chief for The New York Times, claims in her book, The End of Detroit (2003) that by focusing on high-profit light trucks, American automakers, including General Motors, turned its back on people wanting to own cars rather than trucks and opened the door to Toyota, Honda and Hyundai. Consumers retaliated by turning their backs on trucks and purchasing foreign-brand cars. General Motors obviously does not look beyond present trends to what the future might bring. Krolicki's Reuters article (2006) is only one of several news stories (Wall Street Journal, Bloomberg, CNW) reporting the bankruptcy of Delphi, one of GM's most important suppliers, which, along with GMAC filing errors, brought about even more losses in 2005 than had been previously noted. In keeping with General Motors' short-term goals to increase market share, Associated Press writer Dee-Ann Durbin recently announced the company's gas-price

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